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No-Fault Changes Coming July 1, 2021 – A Huge Step in the Wrong Direction

Michigan Car Accident Lawyers – No-Fault Law Changes and How They Impact Victims

On July 1, 2021, the next round of huge changes is coming to the Michigan no-fault law and Michigan car accident law. Lawyers, judges and most importantly accident victims are going to have to navigate this maze of new rules and regulations. Some of these new rules however are plain unjust, and frankly unconstitutional. The state legislature and Governor Whitmer must review and reform some of these changes immediately because they will be catastrophic for our most vulnerable citizens. 

Fee Schedules for Michigan Car Accident Treatment:

One of the most important changes is the implementation of fee schedules for medical providers. For the first time since the Michigan no-fault law was enacted in 1973, doctors, hospital, and acute rehabilitation centers are going to be forced to get reimbursed at a set fee schedule. The fee schedule that will be implemented is benchmarked at 200% Medicare reimbursement rates. This amount is a huge reduction from what medical providers were receiving before. 

This new fee schedule will make it difficult, if not impossible, for some doctors and specialists to treat Michigan car accident victims. By the time they fight the car insurance company and get reimbursed, it won’t be financially worth treating car accident victims.

When doctors get paid by Medicare, at least they know they will get paid within 60-90 days. There is no such guarantee with auto insurance. Companies such as Allstate, State Farm and Progressive fight tooth and nail, delaying and then denying claims for a dozen different reasons. Many doctors simply won’t think it’s worth the fight.  

45% Reduction in Revenue for Doctors and Hospitals:

Further still, under MCL 500.3157(7), if a doctor, hospital or clinic provides a treatment that is not covered by Medicare, that provider can only charge a rate equal to 55% of what they charged for the same treatment on January 1, 2019. This means the acute care centers that treat our most catastrophically injured and vulnerable Michigan car accident victims, individuals with traumatic brain injury, paraplegia, quadriplegia, and other horrible injuries are going to have their revenue sliced by almost half starting July 1, 2021.

This dramatic decrease is forcing treatment centers across the state to close. There is no way any business can survive a 45% cut in revenue overnight, especially when their profit margins are razor thin to begin with. Mitch Albom wrote a wonderful article discussing the fallout and the heartbreak that is going to occur when these much-needed services and treatment plans end. 

Patients will be left in the cold, unable to get the life-saving treatments that have provided them with a productive life following a horrible car crash. The fallout is unfathomable.  

Family Provided Attendant Care Will Be Limited to 56 Hours Per Week:

In addition, the new law is drastically changing how family provided attendant care can be paid. Attendant care is personal car a person receives due to really bad injuries from a car accident. This includes assistance with getting dressed, changing bandages, help with hygiene, assistance with bathing, general supervision, and other more intense treatment protocols. 

Under the old law, friends and family could provide these services without any hourly limitation. And they would get paid for these services at an hourly rate. If 16 hours or 24 hours of care was needed, friends and family could provide this treatment and expect payment from the car insurance company for the work they did. 

But under the new law, friends and family can only provide up to 56 hours of attendant care in any given week and expect payment. Anything after that must be provided by a commercial home care service company with no affiliation to the family. This change has been made despite that fact accident victims had a contract (the auto insurance policy) that guaranteed no limitations on attendant care by friends or family members. 

There are hundreds if not thousands of families who have dutifully cared for their severely injured loved ones on a daily basis for years. From changing colostomy bags, to helping them breathe, to treating severe bed sores and other ailments, family members altered their entire lives to care for their brother, sister, child or parent. And they got paid for this work because legally they were required to get paid by the car insurance carrier.

But no longer. Beginning July 1, 2021, they will not get paid for any work completed after 56 hours in a week.  

Instead, families will have to find a commercial service to fill the void and complete this skilled nursing work. But good luck with that. Since these commercial services will only get reimbursed at 55% of their normal rate under the new law (attendant care is not a Medicare covered service), many of these companies are closing up shop and going out of business beginning July 1, 2021! So, these families are struck with no where to go. 

This did not have to happen. The “reforms” that were enacted in June 2019 did not have to apply retroactively to families who were already getting the contract they bargained for. And frankly they should not apply retroactively.

Accident victims have vested contractual rights to no-fault benefits that are protected from legislature change under the Michigan Constitution. These accident victims, many of whom have been wheelchair bound and dependent on others for the most basic of needs for over 30 years, are covered by an auto insurance policy. 

And these policies – which are contracts – specifically guaranteed certain benefits. A typical auto insurance contract for years provided reimbursement for “all reasonable changes incurred for reasonably necessary products, services and accommodations for a person’s care, recovery or rehabilitation.” There was no fee schedule. 

These benefits included the payment of all medical expenses, with no limitation. The benefits also guaranteed no limitations on attendant care, whether it be an hourly limit or who provides the attendant care services.  

The Michigan Supreme Court May Ultimately Decide This Issue:

A case is running is way through the courts to help right this wrong, but it’s unclear if or when the Michigan Supreme Court will hear it. The case, Andary v. USAA Casualty Insurance Company, asks our courts to not apply the new limitations to family provided attendant care and the 55% fee schedule retroactively. This means that all individuals who were getting 24-hour attendant care by families before the law went into effect would continue to get those benefits. 

The arguments being made are somewhat complicated, but in reality they are straight forwarded. The plaintiffs in the case, which includes a catastrophically injured individual who cannot care for herself, are arguing that a retroactive application of the new laws is a violation of their constitutional rights under the Contract Clause of the Michigan Constitution. 

The plaintiffs argue that the purpose of the Contract Clause is to protect bargains reached by parties by prohibiting states from enacting laws that interfere with pre-existing contractual arrangements. In these situations, the plaintiffs purchased an insurance policy – or contract – that guaranteed them unlimited attendant care and reimbursement at a reasonable and customary rate, not a fee schedule.  

In addition, both retroactive and prospective application of the new laws are a violation of the due process clause and equal protection clause of the Michigan Constitution. 

The trial court in Ingham County dismissed the plaintiff’s claims, and an emergency motion to hear the case by the Michigan Supreme Court was recently denied. So the case will go before the Michigan Court of Appeals first before it inevitably makes its way to our state Supreme Court.

But time is running out. In one month, families across the state of Michigan will be left without any recourse, without any ability to treat their loved ones in an appropriate and dignified way. 

What Can You Do To Help Michigan Car Accident Victims:

I encourage everyone to write and call their state legislators and local leaders immediately. This kind of injustice cannot stand. These people dutifully paid their (very high) auto insurance premiums. They should get the benefits they paid for. There is no reason these benefits should be stolen from them, just so the insurance industry can reap the rewards. And make no mistake, this is a theft in the worse possible way.

Call your legislator today. This link is a list of telephone numbers. Demand action and let them know we need action to protect our state’s most vulnerable and deserving citizens.